Rhode Island state and local governments have run up a huge tab- known as an unfunded liability - for what they have promised togovernment workers in pensions and other retirement benefits buthaven't set aside enough money to pay for.

The bill now stands at $13.63 billion - $9.37 billion forpension payments that have been previously reported and $4.26billion for other benefits, primarily medical insurance, that TheProvidence Journal has newly calculated from state and municipalfinancial reports.

The average household in Rhode Island would have to pay over$30,000 to settle that debt, whether paid off in one lump sum orover the course of several years, even decades.

And that's on top of more than $200 a year from each householdto cover new costs accrued each year for pensions and benefits forfuture retirees.

State and municipal leaders are discussing how to deal with thecrushing $9.37 billion in unfunded pension costs, but little publicattention has been paid to another huge problem: the $4.26 billionneeded to pay for other retiree benefits.

"We cannot decouple these two issues because they go hand inhand," said Fung. "They are similar bears that are knocking on thedoor."

General Assembly leaders have indicated they may call a specialsession this fall to deal with the pension crisis. Fung suggestedthey would be wise to look at other retiree benefits, too. If theydon't, it will become the next fiscal crisis, Fung predicted. "It'sabsolutely not chump change, and that liability will continue togrow."

Governor Chafee was not available to discuss the issue,according to a spokesman, who released a statement on thegovernor's behalf.

"While the underfunding of [retiree benefits] is much smallerthan pension underfunding, it is just as important to address the... issue as it is to achieve pension reform," the statement said."I believe that all interested parties - leadership of publicemployee unions, Speaker [Gordon D.] Fox, Senate President [M.Teresa] Paiva Weed, Treasurer [Gina M.] Raimondo and myself - mustcollaborate to develop a sustainable reform plan that is alsoaffordable for our state's taxpayers, and I look forward tobringing all parties together in the near future."

Richard A. Licht, Chafee's director of administration,reiterated the governor's assertion that, compared with pensions,the funding of other retiree benefits is not as big a problem,though he added, "Any unfunded liability is something you have tobe concerned about."

Where state plans account for $6.8 billion out of the $9.37billion in unfunded liabilities for all government pension plans inRhode Island, state plans make up only $775 million of the $4.26billion in unfunded liabilities for other retiree benefits, Lichtnoted. "It shows the state government has this much more undercontrol than the municipalities."

But that doesn't mean retiree benefits won't be included in thisyear's discussions on solving the pension crisis.

Raimondo, who was not available to discuss the issue, concurredwith Licht in a statement issued by a spokeswoman.

"While funding the state [retiree benefits] is still achallenge, it is smaller in comparison with the state's pensionproblems," Raimondo's statement said. "The state is no longeroperating as pay-as-you-go due to the establishment of the trust in2010 and meeting its [required payments] in 2011."

Raimondo credited the General Assembly with legislation thatlimited retiree health care in 2009, established the trust in 2010and provided enough money to make the required contribution thisyear.

"All of these are important steps toward funding the state's[retiree benefit] obligation," she said. "Relative to other states,Rhode Island is in better shape largely due to the efforts of theGeneral Assembly's retiree health-care legislation 2009."

In the state and local pension plans, the government withholds aset portion of each employee's pay - for teachers, it's 9.5 percent- to contribute to the plan. Similarly, employees contribute totheir other retirement benefits, though sometimes in differentways, such as paying portions of insurance premiums or co-pays whenvisiting the doctor.

Most government agencies have no money set aside to pay medical,dental and life insurance and other retiree benefits, according toThe Journal's review of hundreds of pages of state and municipalfinancial reports that detail how governments are preparing fortheir employees' futures.

The problems with unfunded retiree benefit plans range from astaggering $1.5 billion in the capital city of Providence - morethan a third of the total - to $780,502 for Foster, a rural townhugging the Connecticut border. Some municipalities break downtheir liability by department, but no community as a whole has alower liability than Foster's.

The Journal found that Rhode Island's 39 cities and towns, fourregional school districts and state government have put away $27.5million, less than 1 percent of the total amount needed for thesebenefits.

Only 10 cities and towns have set aside any money to coverretiree benefits, according to the most recent municipal auditreports. Another four either do not offer retiree benefits or areending the practice next year. That leaves 25 cities and towns -plus state government - that have put nothing aside, according totheir most recent audit reports.

Licht said the state has begun putting money into a trust fundto pay for retiree benefits, with $52.7 million contributed in thecurrent budget year and $56.0 million slated for next year.

For every year they work, employees earn credits toward theirpension and other retirement benefits.

Each year, through employee and taxpayer contributions, enoughmoney should be put into pension and benefit funds to cover thecredits the employees have accumulated, factoring in how much thecontributions will earn through investments.

If the government and its employees contribute less money, thesize of the unfunded liability grows.

If they contribute the correct amount of money, then, on the dayan employee retires, enough money should have been set aside tocover the promised pension and other benefits for thatemployee.

While accounting rules require reports on how much liability ispiling up for retiree benefits and how much has been set aside topay for them, nothing requires them to set the money aside. Fordecades, most government entities in Rhode Island have relied on a"pay-as-you-go" system. Under pay-as-you-go, governments take moneyout of their yearly operating budgets to pay for workers'benefits.

The government accounting rules were changed in 2004, withimplementation phased in through 2008, to require pay-as-you-goplans to report these financial details.

The Governmental Accounting Standards Board says the moneyshould be put aside in the year that the employee earns the benefitrather than after the employee retires. Delaying payment, ashappens under pay-as-you-go, hides the true cost of the workforce.

Pay-as-you-go also hits taxpayers harder, forcing them to paymore to make up for lost investment income."In general, it's alwaysbetter if you really start tackling the overall liability rightfrom the get-go," said Cranston's Mayor Fung. "It doesn't becomethis onerous effort borne solely by the taxpayers."

Where does the $30,000 come from?

The Providence Journal calculated the average household share ofthe unfunded liabilities for pensions and other retiree benefits intwo ways:

• One is by taking the entire $13.63-billion unfundedliability and dividing it by the number of households in RhodeIsland, 413,600, as counted in the 2010 Census. The U.S. CensusBureau defines a household as all people living in a single housingunit, regardless of whether they are related by marriage, birth oradoption. In Rhode Island, the average household size was 2.44people.

Using that calculation, the average household's share of theunfunded liability is $32,963.

• But not all Rhode Islanders live in households. TheCensus counted 42,663 people living in group quarters. Thisincludes college dorms, military barracks and prisons. So TheJournal assigned a proportional share of the unfunded liability tothose people and divided the rest by the number of households.